“Roam like home” is the promise that some European operators make to their customers, who cross national borders more frequently than do their North American counterparts. But few of these operators are ready to completely eliminate all roaming fees, despite a European Parliament mandate to do so.
The law abolishing roaming fees has not secured the approval of the EU Council and, for now, European operators still have a choice about whether to charge for roaming. Many are spending millions trying to prepare to offer the seamless roaming experience they expect governments will soon require.
“There is a lot of pushback by the associations and the operators to say that they’re simply not in a position to do it, and there are a couple of very real issues,” said Syniverse CMO Mary Clark, who is working with a number of European operators. As a provider of IPX services, Syniverse handles tens of thousands of roaming pairs each month.
Clark said that reports she has seen from the GSMA and others indicate that operators will not be ready to implement seamless roaming until 2017.
“I would also say that there’s an enormous issue associated with just simply provisioning,” she said. “There’s a lot of investment to literally provision even a day pack. Even as most [operators] experiment with different types of offerings for just intra-EU roaming, they are constrained by their systems internally and by how rapidly they can put out a new offer. It is not a snap of the fingers to figure out what is the right price point.”
Another big issue is quantifying the amount of data a roaming subscriber can use. European travelers are used to buying bundles of roaming data, and may be reluctant to use their phones at all if they do not understand the new pricing.
“The consistent expectation of the consumer to have a metered usage type of experience when roaming could very well be one of the biggest issues that [operators] face in spurring usage and moving away from that model,” said Clark, adding that service providers will start to move away from metered pricing as they identify data “caps” and agree on definitions of “reasonable use.”
Operators will definitely take a hit if they cannot charge effectively for the right to roam. Currently, roaming fees represent 5-6% of European carrier revenue, according to Deloitte Consulting. In the future, it looks likely that operators will be able to charge one another for roaming, but will not be able to charge subscribers.
“The industry recognizes that the cost to the subscriber is rather significant for data roaming, so something had to be done, but unfortunately it didn’t work out in favor of the service providers,” said Travis Russell, technologist and product marketing director at Oracle. “But I think it will force them to start looking at some other revenue opportunities rather than just the traditional revenue opportunities.”
Syniverse’s Clark concurs with that prediction. She said that operators that can integrate offers from local retailers into their service will be able to incent travelers to roam, and therefore should be able to negotiate better reciprocal roaming agreements with the home providers for those travelers. Even when service providers lose the ability to charge discrete roaming fees, they will still be able to earn more from subscribers who are heavy data users, no matter where they connect.
Mobile operators may also turn to Wi-Fi to enable roaming, especially as more and more devices support voice-over-Wi-Fi.
“What we will see is the operators starting to work with the Wi-Fi hot spot providers, which are often other operators, and allow users to go back and forth,” said analyst Sue Rudd of Strategy Analytics. She expects traditional IPX providers like Syniverse to help operators enable Wi-Fi authentication, or at least to interoperate with it.
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